David Rutley: I congratulate my hon. Friend the Member for Rutland and Melton (Alicia Kearns) on securing this timely and very important debate. I pay tribute to her for her work as Chair of the Foreign Affairs Committee, along with her tireless and very active efforts to secure a more stable, peaceful and prosperous future for the people of the western Balkans. The Minister of State, Foreign, Commonwealth and Development Office, my hon. Friend the Member for Wealden (Ms Ghani), the Minister for Europe, would have been delighted to take part in the debate. She is currently travelling on ministerial duties, so it is my pleasure to respond on behalf of the Government. I am grateful to hon. Members for their many thoughtful and emotive contributions, which help us to understand the significance of the region.
The people of the western Balkans clearly deserve the opportunity to live in stable, inclusive and democratic societies where they can heal the scars left by conflict and grasp every opportunity to thrive and prosper. That is what we are striving towards: all six countries playing their full part in the Euro-Atlantic family of nations, with the opportunities and benefits that brings. Sadly, as we have heard today, we are a long way from the peaceful and stable Balkans we all wish to see. The contributions from my hon. Friend the Member for Rutland and Melton and the hon. Members for Glasgow North (Patrick Grady) and for Cardiff South and Penarth (Stephen Doughty) highlighted the context within which we are working: democracy is fragile at best; political elites are ramping up ethno-nationalist tensions for their own benefit; and Russia, as was highlighted by Members across the House, is fanning the flames of division to distract attention from Ukraine and move the region away from the west. It is good to see the House united in calling out that behaviour.
We must, of course, avoid a return to conflict in the western Balkans at all costs. We are painfully aware of the serious consequences that that would have in the region and beyond. Meanwhile, it is clear that political weakness and instability in the western Balkans is threatening the UK’s security. Endemic corruption is fuelling illegal migration and allowing serious organised crime groups to thrive and operate in this country, including in the drugs trade.
With that in mind, we are taking a multi-faceted approach. First, we are addressing the drivers of instability, whether that be Dodik’s push for secession or heightened tensions between Serbia and Kosovo, but we are also focusing on the underlying factors enabling that. We are engaged with all six countries, taking a cross-Government approach underpinned by our programmes in the region. Last year, we spent over £47 million on supporting security and defence, preventing conflict and promoting media freedom, along with efforts to tackle corruption and organised crime, and to empower women and girls.
Given the growing instability, with all the risks it poses, we are prioritising the western Balkans in our diplomatic engagement. As others have pointed out, the fact that one of the Foreign Secretary’s first visits was to Kosovo, in January, demonstrates the importance that we place on our ties with the region. Indeed, the Prime Minister’s special envoy to the western Balkans, Lord Peach, visited the region 12 times last year and made a further 16 trips to other interested countries, as well as engaging regularly with international organisations such as NATO and the EU.
The UK has long worked with Serbia on shared priorities and will continue to do so, making clear the points on which we disagree and judging individuals by their actions. It is not for us to comment on the appointment of individual Ministers, but it clearly raises questions when we see a US-sanctioned individual in the Government.
A number of issues have been raised today about the relationship between Kosovo and Serbia. We have seen an increase in violence, including last September’s terrible attack in Banjska, which was described very clearly by my hon. Friend the Member for Rutland and Melton. In every meeting, every call and every letter that we exchange with Serbian and Kosovan leaders, we urge them to avoid inflammatory rhetoric and escalation and engage constructively in the dialogue. Only through genuine dialogue and mutual good will can we normalise relations between Kosovo and Serbia and start to build the brighter future that their citizens deserve. We also continue to make it clear to the Serbian authorities that they must co-operate fully with efforts to hold to account those responsible for the Banjska attack, take steps to tackle cross-border arms smuggling, and encourage Kosovo Serbs to return to the institutions and serve the communities that they represent. We have also made clear to the Kosovo Government the need to ensure that minority communities can play a full and equal role in the country’s future.
We are disappointed that the mayoral recall referendum on Sunday 21 April was boycotted by Kosovo Serbs. It was arranged specifically to return Kosovan municipalities to representational governance, and it is important for a route back to that to be found. I can confirm to Members, if they do not already know, that the UK will vote for Kosovo to join the Council of Europe.
Points have been raised about investigations of the Banjska attack. The Kosovan police and prosecutors are the appropriate authorities to investigate it, and it right for us to wait for that investigation to conclude. We have previously sanctioned Radoičić, as well as the Kosovan criminal charged with organising the attack. We have urged Serbia to hold perpetrators to account and address the ongoing problem of cross-border arms smuggling.
Along with others, the hon. Member for Tiverton and Honiton (Richard Foord) rightly spoke of the role of Lord Ashdown in Bosnia and Herzegovina, but I think we all recognise the important role performed there by my right hon. and gallant Friend the Member for Beckenham (Bob Stewart). He reminded us that that country matters, and highlighted the tensions that exist there. I will never forget visiting Sarajevo with my family. One cannot but be moved by being in that great city, meeting its people, and being reminded of the horrors of the past.
We recognise that we are facing the threat of Republika Srpska seceding from Bosnia and Herzegovina. We have condemned Dodik’s secessionist actions, and have under- lined our steadfast support for the High Representative.  We are working with our international partners to deter further attempts at destabilisation, and to support the reforms that are necessary for progress towards EU accession.

Stephen Timms: The right hon. Gentleman is quite right. We have noted a bit of a move towards sole trustees in a number of cases, which clearly gives rise to concerns about how one person can represent the interests of the members of a pension scheme. We are reflecting on that in our work, but one of the members of the Hewlett-Packard scheme wrote to me this week—he may well also have written to other Members—about
“the further fear and despair they are now feeling as it dawns upon them that their company and pension scheme trustees are meanwhile preparing plans to derisk by transferring their Pensioner responsibilities to an Insurance Company”—
something the right hon. Gentleman touched on. That transfer will quite possibly mean
“no subsequent possibility ever for pre-1997 increases.”
He calls that “a frightening prospect”, and it is hard to disagree.
The Committee also looked at concerns about the new defined benefit funding regime to be introduced for scheme valuations from September. We noted that the regime had been developed
“in a different era when the vast majority of DB schemes were in deficit and amidst concern that employers were seeking to evade their responsibility to underfunded schemes.”
There have been big changes since then, especially in the wake of the liability-driven investment crisis following the Budget of 18 months or so ago. In particular, there have been significant improvements in scheme funding, but the principles of the new regime have not been changed. Schemes are expected to target a position of low dependency on the sponsoring employer, meaning low-investment risk at the point of significant maturity. That has promoted concerns that the funding code will, when introduced, force more unnecessary de-risking, particularly among open schemes, as well as among those that are closed but have long time horizons, which would increase costs to employers and result in premature closure.
We said that the DWP and the Pensions Regulator needed
“to act urgently to ensure they do not inadvertently finish off what few open schemes remain by further increasing the risk aversion”.
In a letter to the Committee on 18 December, the Minister told us that both the Department and the Pensions Regulator were
“acutely aware of the need to take account of the specific needs of open schemes,”
and he agreed that
“open schemes should not be forced into an inappropriate de-risking journey.”
We welcomed that assurance, but it needs now to be reflected in the final wording of the funding code and in the regulator’s approach.
The vote in Parliament on the statutory instrument came before the final version of the funding code was published, so Members did not quite know what they were voting for at that point. We recommended that the Department and the Pensions Regulator should work with open schemes to address their concerns, particularly on the employer covenant horizon—the length of time for which they are confident in the sponsoring employer’s willingness and ability to support the scheme—and report back to us on how they will do so before the new funding code is laid before Parliament.
Since our report was published, feedback from schemes suggests that things may not be moving in the right direction. In a consultation response last week, the University Superannuation Scheme—a large and still open scheme—described the regulator’s proposed approach as
“university superannuation schemes”.
In its view, the statement that it will be required to complete under the terms of the new code will demand
“significant…resource for little or no benefit to our members.”
To the USS, and to me, that appears inconsistent with the assurances that open schemes will not be adversely impacted by the new funding regime. The USS adds:
“Not…having had sight of the revised…Funding Code and accompanying covenant guidance has exacerbated”
their worries.
I know that the Minister understands these concerns well. Closure of those schemes would reduce pension fund investment in the productive economy at a time when the Chancellor wants—absolutely rightly—to increase investment from pension schemes into the productive economy. Can the Minister tell us when he expects the new funding code to be published, whether he will report back to the Committee before then on how the concerns of open schemes have been addressed, and whether he is open to considering a separate chapter in the funding code, setting out how the code will apply to open schemes?
Let me take a few minutes to talk about what is happening on the defined contribution side of the picture.